What is the New State Pension? Employment

Pensions can be a tricky minefield to understand, with seemingly so many different types available to you throughout your life. However, if you’re coming up to retiring age, it’s important that you have a good understanding of what your future payments will look like. In order to help you with this, we’ve put together the following guide.

What is New State Pension?

The new State Pension was introduced in 2016 to simplify the planning process for those considering retirement from an early age. Whilst the process and rules may have changed slightly, the idea remains the same. State pension is a regular payment that can be claimed from the government when you reach a certain age (State Pension age).

Payments will be based upon your National Insurance contributions. In most cases, this will take into account the national insurance records earned before the 6 April 2016. However, if none have been made before this date, you will be expected to have 35 qualifying years to receive the full amount of State Pension. To receive any money at all, you will usually need to have at least ten years of National Insurance records.

Can I Have Multiple Pension Pots?

Yes, a state pension usually makes up a portion of your post-retirement pension. One of the most common misconceptions is that it is the be all and end all of your payments. That is simply not true. State pension can actually be claimed alongside a private pension or a workplace pension.

Therefore, if you have any other pensions, it may be worth claiming State Pension to top it up.

Am I Eligible For New State Pension?

You will be able to claim the new state pension based on a variety of factors. The first is that you must be:

  • A man born on or after 6 April 1951
  • A woman born on or after 6 April 1953

You will not be able to claim until you reach State Pension age. This can often differ from the age that you receive other pensions that you have been paying into. In order to find out what your State Pension age is, you can use the calculator on the government’s website.

You will also have to have made ten qualifying years of National Insurance. Whilst these don’t need to be consecutive, there are some rules. You must have either been working and paid NI, received NI credits, or paid voluntary NI contributions.

How Much Can I Claim?

If you were to receive the full payment of State Pension, you will receive £179.60. However, this can be both higher or lower in some circumstances. If you receive less than this, it’s likely based on the fact that you have contributed NI payments for less than 35 qualifying years. However, you could receive a higher amount if:

  • You have over a certain amount of Additional State Pension
  • You defer your State Pension

If it is that your total income is made up of a pension and it breaches your personal tax-free allowance, you may also be taxed on this amount. This amount is also subject to change each year depending on whichever of the following factors is the highest:

  • The average percentage growth in wages in the UK
  • The percentage growth in prices in the UK according to the Consumer Prices Index
  • 2.5%

How Can I Claim?

If you have reached State Pension age, you should have received a letter prompting you to claim. This letter should include all of the instructions for what you can do. However, if you have misplaced this letter or you’re yet to receive one, don’t worry. You can apply online within four months of reaching State Pension age. If you would rather not apply online, you can also phone the Pension Service to ask for a claim form or download a claim form online to send to your local pension centre.

Once you have made your claim, you will receive a letter regarding your payments which should land in your account every 4 weeks. The day that you will receive your money depends on the last two digits of your NI number and can be worked out according to the table on the government website.

Need Employment and Welfare Advice? Contact BBO For Advice

If you’re interested in learning more about State Pension or you have any other retirement questions, please contact us. Here at Building Better Opportunities, we are committed to providing employment and welfare advice to people across Stafford and South Staffordshire. To speak to one of our advocates, you can either give us a call or attend one of our drop-in sessions.